| Wed 20 Dec 2006, 9:30 | | MTX - Metorex - Disposal by Metorex of its 74% int |
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MTX
MEMTX
MTX - Metorex - Disposal by Metorex of its 74% interest in Barberton Mines
(Proprietary) Limited ("Barberton") to Pan African Resources
Plc ("Pan African
METOREX LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1934/005478/06)
JSE code: MTX
ISIN: ZAE000022745
Issuer code: MEMTX
("Metorex")
DISPOSAL BY METOREX OF ITS 74% INTEREST IN BARBERTON MINES (PROPRIETARY)
LIMITED ("BARBERTON") TO PAN AFRICAN RESOURCES PLC ("PAN AFRICAN")
Key Highlights:
* Reverse takeover of Pan African by Metorex
* 74% interest in Barberton disposed of by Metorex for approximately
R500 million in exchange for 55% stake in Pan African
* Pan African quoted on AIM and to be listed on JSE
* Pan African is a gold exploration company with activities in
Mozambique and the Central African Republic
* Establishment by Metorex of a controlling stake in a focussed gold
entity
* Strong geological expertise in Pan African
* Barberton exploration potential to be developed
Charles Needham, CEO of Metorex said:
"This transaction is a great opportunity for Metorex to expand its gold
interests into exploration and to house this in a separate listed company.
Pan African has some excellent exploration assets and their geological
expertise will help us to fast track the development of our own exploration
at Barberton."
1. Introduction
Metorex advises that an agreement was signed on 19 December 2006 in
terms of which Metorex will, subject to the fulfilment of the
conditions precedent set out in paragraph 2.5 below, dispose of its
74% interest in Barberton to Pan African for GBP35.62 million
(approximately R500 million) ("the transaction"). The transaction
constitutes a reverse take-over of Pan African whereby Metorex will
ultimately hold 55% of Pan African`s issued share capital. The
remaining 26% of Barberton is held by an empowerment group so as to
comply with the Minerals Petroleum Resources Development Act and Broad
Based Socio-economic Empowerment Charter for the South African Mining
Industry.
2. The transaction
2.1 Settlement of consideration
The transaction consideration of GBP35.62 million will be
satisfied by the issue of 593.7 million ordinary Pan African
shares, providing Metorex with a 55% interest in Pan African.
2.2 Information relating to Barberton
Barberton comprises the Fairview, Sheba and New Consort Mines in
the Barberton area which produce approximately 100,000 ounces of
gold per annum.
2.3 Information relating to Pan African
Pan African is an African based gold exploration company quoted
on the Alternative Investment Market operated by the London Stock
Exchange plc ("AIM"). Pan African is currently completing a pre-
feasibility study on the viability of a 1Moz open pit mining
operation at its Manica gold project in Mozambique. The mining
scoping study on the project was calculated on an annual
production rate of 86,000 ounces at a cash cost of US$387/oz over
8.5 years.
Upon successful completion and implementation of a Bankable
Feasibility Study at the Manica gold project in Mozambique, Pan
African together with Barberton, will have a combined production
output of approximately 180,000 ounces per annum. As a condition
of the transaction, Pan African will also issue 60 million shares
to Pangea Exploration (Proprietary) Limited ("Pangea") to acquire
the 20% interest it holds in the Manica gold project, thereby
taking Pan African`s stake in that project to 100%.
In the Central African Republic, Pan African holds title through
4 exclusive exploration licenses, as part of a contributory Joint
Venture, to the Bogoin and Dekoa gold projects. These projects
cover over 4000km2 of highly promising gold-bearing greenstone
belts in the country. At the Bogoin project, a gold-in-soil
anomaly 12km in strike-length has been identified. Some of the
best historical boreholes drilled within the anomaly include
values of 17.38g/t over 19m, 5.05g/t over 20m and 3.90g/t over
18m. Drilling to test the depth extension of this gold-in-soil
anomaly is expected to start in Q1 of 2007. Stream sediment
sampling is currently underway at the Dekoa gold project.
Pan African plans to acquire a portfolio of mineral deposits with
world-class potential within the African continent with the
intention of developing them to further enhance shareholder
value.
2.4 Rationale
The completion of the transaction will provide Metorex with a
controlling interest in a separately listed gold entity with a
strong exploration play. Pan African`s current gold exploration
targets together with the combination of its strong geological
expertise and the mining skills and experience of Metorex, are
expected to add significant value to Metorex`s shareholding in a
focused gold vehicle. In addition, the listing on AIM and the
JSE will enable Metorex to attain a valuation for its share of
the gold assets more consistent with valuations of gold stocks in
general.
The transaction will establish Pan African as a gold producer,
which sets it apart from its peer group, and adds to Barberton an
extensive exploration programme on its lease area.
2.5 Conditions precedent
The transaction is conditional, inter alia, upon:
- the relevant regulatory approvals being obtained by Pan
African, including the suspension of its shares on AIM for
the time being,
- the relevant regulatory approvals, including South African
Reserve Bank and Competition Commission (if required), being
obtained by Metorex;
- Pan African shareholder approval;
waiver of the mandatory cash bid requirements of the UK City
Code on Takeovers and Mergers;
- the listing of Pan African`s ordinary shares on the JSE;
Pan African`s re-admission to AIM; and
- Shanduka Gold (Pty) Ltd unconditionally waiving its pre-
emptive and tag-along rights in Barberton.
2.6 Utilisation of the proceeds
The securities received as settlement of the consideration will
be held by Metorex as a long term investment in Pan African.
2.7 Warranties
The transaction will be subject to the normal warranties and
indemnities relating to transactions of this nature.
2.8 Financial effects of the transaction
The unaudited pro forma financial effects of the transaction, for
which the directors are responsible, are provided for
illustrative purposes only to show the effect of the transaction
on earnings and net asset value per share as if the transaction
had taken place on 1 July 2005 and 30 June 2006, respectively.
Because of their nature the unaudited pro forma financial effects
may not give a true picture of the Group`s financial position and
performance. The unaudited pro forma financial effects have been
compiled from the audited consolidated financial statements for
the year ended 30 June 2006 and are presented in a manner
consistent with the format and accounting policies adopted by
Metorex and have been adjusted as described in the notes hereto:
30.6.2006 Pro forma
Audited After
before the the %
Notes transaction trans-action change
Earnings per share 1, 2 55.1 100.2 82%
(cents)
Headline per share 1, 2 47.7 44.9 -6%
(cents)
Diluted earnings 1, 2 53.9 99.0 84%
per share (cents)
Diluted headline 1, 2 46.7 43.9 -6%
earnings per share
(cents)
Net asset value 3 282 334 18%
per share (cents)
Net tangible asset 276 328 19%
value per share 3
(cents)
Actual number of 289 026 289 026 -
shares in issue
(000`s)
Weighted average 286 147 286 147 -
number of shares
in issue (000`s)
Notes:
1. The "before" earnings per share, diluted earnings per share,
headline earnings per share and diluted headline earnings
per share figures are based on the weighted average number
of shares in issue at 30 June 2006;
2. The adjustments to the earnings per share, diluted earnings
per share, headline earnings per share and diluted headline
earnings per share are based on the weighted average number
of shares in issue at 30 June 2006 and are stated assuming
that the transaction is effective 1 July 2005;
3. For net asset value and tangible net asset value
calculations, it is assumed that the transaction is
effective 30 June 2006 and based on the actual number of
shares in issue at 30 June 2006.
The adjustments per note 2 above reflect a dilution in
Barberton`s after tax earnings attributable to Metorex
together with a profit on disposal of Barberton calculated
on the basis of a reverse take-over of Pan African. The
adjustment per note 3 above reflects the profit on disposal
of Barberton only.
3. Effective date
The transaction will become effective on the 5th business day
following the fulfilment of the conditions precedent set out in
paragraph 2.5 above.
4. Categorisation of the transaction
The transaction is a Category 3 transaction in terms of the Listings
Requirements of the JSE and therefore no circular to shareholders is
required.
Johannesburg
20 December 2006
Sponsor:
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
Date: 20/12/2006 09:30:01 Produced by the JSE SENS Department.
